Staples Q1 Profit Falls, Misses Estimates; Sees Q2 Adj. EPS Below View

(RTTNews) - Office supplies retailer Staples Inc. (SPLS) reported that its net income for the first quarter 2014 fell to $96.21 million or $0.15 per share, from $169.93 million or $0.26 per share in the first quarter of 2013.

The company incurred $46 million of pre-tax restructuring and other related charges primarily associated with the closure of 16 stores in the first quarter, as well as the company's plan to close approximately 80 stores in North America during the second quarter of 2014. The company also incurred an $11 million tax charge related to the repatriation of foreign earnings, as well as a net gain of $22 million primarily related to the sale of the company's Smilemakers business.

Non-GAAP net income for the recent quarter was $114.50 million or $0.18 per share. Analysts polled by Thomson Reuters expected the company to report earnings of $0.21 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter dropped to $5.65 billion from $5.81 billion in the year ago quarter. Wall Street analysts had a consensus revenue estimate of $5.62 billion. Total company sales growth for the latest-quarter was negatively impacted by approximately one percent due to changes in foreign exchange rates and store closures in North America during the 12 months preceding the first quarter of 2014.

For the second quarter of 2014, the company expects sales to decrease versus the second quarter of 2013. The company expects to achieve non-GAAP earnings per share in the range of $0.09 to $0.14 for the second quarter of 2014. Analysts expect the company to report earnings of $0.15 per share and revenues of $5.19 billion for the second-quarter.

The company expects to record pre-tax charges in the range of $105 million to $155 million associated with restructuring and other related activities during the second quarter of 2014.

For the full year, the company expects total pre-tax global restructuring and other related charges in the range of $240 million to $360 million. For the full year, the company expects to generate more than $600 million of free cash flow.